Tax Returns (Hansard, 24 October 2002)

§ Mr. Wiggin
To ask the Chancellor of the Exchequer what criteria are used to separate errors in tax returns from deliberate late payments; and what interest rates are applied to these different categories. [75147]

§ Dawn Primarolo
No distinction is made between the categories for the purposes of interest rates.

§ Mr. Wiggin
To ask the Chancellor of the Exchequer what interest rate is paid on sums collected in taxes in error and in advance. [75148]

§ Dawn Primarolo
If the Inland Revenue issues a request for tax which is found later not to be due, the money is repaid with interest. The rate of interest440W depends upon the type of tax. For income tax and capital gains tax the rate is 2.5 per cent. For corporation tax and inheritance tax it is 3 per cent.
Money paid in error or in advance of tax becoming due generally does not attract interest.

§ Mr. Wiggin
To ask the Chancellor of the Exchequer upon what criteria the interest rates for the late payment of taxes are determined. [75149]

§ Dawn Primarolo
The criteria are contained in regulations which were laid before the House on 28 July 1989 (SI 1989 No. 1297) These regulations set down formulae for the calculation of interest rates. The basis of the formulae is the average of the base lending rates of 6 major banks.